Economics 101: supply and demand

Discussion in 'Mayberry Lounge' started by Hotep, May 17, 2014.

  1. Hotep

    Hotep "Ours is the FURY!"

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    Greetings,

    I've called on you all before; I'm calling on you all again. Our assignment is to find an article about a decrease or an increase in the price of something. Then, we have to determine the cause of the price change: a shift in supply or a shift in demand.

    My article is about ComEd (an electricity co.) increasing its prices. From the article:

    Electricity prices are higher because there are currently fewer cheaper players in the market. Coal-powered plants, which used to be less expensive to run, need to make investments to meet more stringent environmental regulations. They either charge higher prices to keep providing power or close down.

    As a result, it's not just ComEd customers who will see higher bills. Other suppliers, including the many private firms that compete with ComEd in Illinois' deregulated power market, will charge more, as well.

    The supply hasn't decreased, right? The number of suppliers has decreased. Demand is unchanged. What has caused the price increase, a shift in supply or a shift in demand?

    I appreciate the help, my lords.

    http://articles.chicagotribune.com/...20140507_1_comed-david-kolata-power-customers
     
  2. Jack Reacheround

    Jack Reacheround Never Go Black

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    In the supply & demand model, the supply represents aggregate supply. In other words, all of the suppliers in the market. So if suppliers drop out of the market, the supply line does shift left, or decrease.
     
  3. MMAdict

    MMAdict Brown Belt

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    To piggyback off of what Soda Pop said, the price would then increase due to the leftward shift of the supply curve. The demand is not affected so their is no movement there and now the supply curve is crossing at a higher point on the demand curve. Indicating the price is higher with a lower quantity sol[​IMG]d.
     
  4. MMAdict

    MMAdict Brown Belt

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